According to businessmen and economists, as a country, India is doing well. But while the rich are getting richer, the poor -- especially people who do not live in cities, the rural population -- are not doing too well. Of these, the very poor neither have the money to buy the basic essentials nor do they have jobs that would enable them to earn money. It becomes a vicious cycle. If you are very poor, you do not have the work experience or the skills to help you get a job, and you are usually too poor to look for and find a job. That means you stay poor. And if you are poor you also have no education, so you have nothing to offer employers except your physical labour. If you cannot get enough food because you are too poor, you also get too weak to do manual labour.

How do you get out of this cycle? One way people try to do so is by moving from rural areas to cities where, hopefully, they will find a job and earn enough to support themselves and also send money back home. But since more and more poor people move to the city, jobs in the cities also get difficult to find, so people end up poor and alone, a long way from home, unable to support themselves or their families back in the villages.

Over a quarter of India’s population is officially poor. Many are poor because they do not have jobs. In richer developed countries, an ‘unemployment benefit’ is given to unemployed citizens. In India, the unemployed are supposed to support themselves, which, being poor, they cannot do. The National Rural Employment Guarantee Act (NREGA), which was passed as a Bill in Parliament last year, is meant to pull people out of this cycle by giving them work and paying them for it. The Act comes into effect this month, on February 2.

The NREGA says that every state government should guarantee at least 100 days of paid work every year to each rural household that needs work. Since the scheme is specifically designed to help the very poor, it has been decided that work will be provided to one person in a poor family, rather than anyone who can work. This will ensure that the work is spread around, rather than a few families getting rich.

Generally, the work will be unskilled manual work of the sort that any able bodied person can do. If the person who applies is not given work, he/she will have to be paid an unemployment allowance until such time as work is available. The Act also says that people have to be paid soon after the work starts, and on a weekly basis. This means that they cannot be made to work on promises of future pay. Also, payment has to be given to the person doing the work not to a middleman. The government has fixed the minimum pay for such work at Rs 60 a day.

Every state will set up a State Employment Guarantee Council that will decide on projects where people can be employed, check to see if the work is being properly carried out, and that payments are being made. Panchayats and village councils and non-government organisations will also be involved.

Obviously just 100 days of work at Rs 60 a day is not enough to pull an entire family out of poverty if it has no other means of earning a livelihood. But it’s a start. Having money, even a little, helps you make more money, helping break the poverty cycle. The government has also decided that work done under this scheme will be work that is useful to the district and the poorest people of that district. For example, water for irrigation always benefits people by giving them a chance to grow crops throughout the year, not only during the rainy season; having enough water also helps reduce poverty by improving health. So, many of the projects selected are to do with water conservation and various forms of drought and flood control, including cleaning up disused traditional water tanks. People will also be employed to build small local irrigation canals, especially those reaching agricultural land belonging to the poorest of the poor. Projects dealing with forests and tree planting also come under this scheme, since poor people depend a lot more on forests than do the better-off.

How much is this going to cost India? And where is the money going to come from? As a start, an older, similar programme -- the National Food for Work Programme -- is going to be converted into the employment guarantee scheme. All the money that was earlier supposed to be spent on the food programme will be switched over to the work programme. This works out quite well because the 150 poor districts chosen for the food for work programme can be a starting point, after which all 600 districts in India can be systematically covered in five years. The total cost will be around Rs 40,000 crore annually. Which is quite affordable, being less then 2% of the GDP -- the total amount of money made by India in a year. State governments will provide money for just 10% of the scheme in their states.

All this sounds wonderful on paper but many people have expressed doubts over whether the NREGA will actually work. Maharashtra began a similar scheme some time ago, which ran into lots of problems. The biggest problem was corruption. Corrupt government officials and middlemen started faking work, taking advantage of illiterate workers by not paying them their due, or even just taking their names, inventing work and claiming their money. And since the poorest people could not read or write, they didn’t know that they were entitled to this money, or that their names were being used. Even if they did know, they could not do anything about it, their poverty made them powerless. The fear is that this situation could now be repeated all over India in the National Rural Employment Guarantee Scheme.

Many people also feel that the cost of the scheme is huge in real terms, and that the money would be better spent on smaller more focused projects that would help all of India, not just the poorest of the poor. If such projects were given preference, they say, the money and the jobs would ‘trickle down’ to the poor, as India grows. And then, schemes like the National Rural Employment Guarantee Scheme would simply not be necessary.